US$12 Billion RNA Deal Triggers Sector Shakeup

RNA Therapeutics: A Rapidly Evolving Sector Backed by Innovation and Demand

The RNA therapeutics sector continued to expand in 2025, propelled by clinical advancements, regulatory support, and growing demand for treatments targeting cancer and rare genetic disorders. According to Straits Research, the global market was valued at US$20.32 billion in 2025 and was projected to more than double to US$45.35 billion by 2034, driven by a 9.37% compound annual growth rate.

North America held a 43.79% share of the global market, supported by increased FDA approvals and a growing chronic disease burden. The U.S. alone accounted for US$8.35 billion of the total, with new government funding initiatives boosting innovation. In April, the National Institutes of Health committed more than US$200 million to RNAi platform development for cancer and rare diseases (Straits Research).

Technical breakthroughs have also addressed historical challenges in the field. Nature.com noted that chemical modifications to RNA molecules have improved their stability, circulation time, and target specificity, enabling broader therapeutic application across small RNA, translatable RNA, and CRISPR-based approaches.

Meanwhile, next-generation RNA formats are gaining traction. A November 13 article from Drug Target Review highlighted growing industry interest in circular RNA, which may offer more durable expression than linear mRNA. Erik Digman Wiklund, CEO of Circio, said, "Synthetic LNP-formulated circular RNA offers a likely clear advantage for vaccine applications," though its full potential across therapeutic contexts remains under investigation.

While high manufacturing costs remain a constraint, the continued expansion of mRNA and RNAi pipelines across oncology and neuromuscular indications underscores the sector's momentum. In 2025, mRNA therapeutics held the largest market share at 31.42%, with oncology as the fastest-growing application segment.

Analyst Perspective: Deal Validates Platform but Limits Further Upside

On October 27, H.C. Wainwright & Co. analyst Dr. Ananda Ghosh downgraded Avidity Biosciences from Buy to Neutral following the announcement of its US$12 billion acquisition by Novartis. The analysts adjusted their price target to US$72, stating the valuation aligned with the proposed acquisition terms and represented the total return investors could expect under the current structure.

The report noted that the deal offered a 46% premium to Avidity's October 24 closing price and a 62% premium to its 30-day volume-weighted average price. In addition to the cash consideration, shareholders would receive equity in a newly formed company, referred to as SpinCo, which will hold Avidity's early-stage precision cardiology programs and be capitalized with US$270 million in cash.

The analysts wrote that the transaction "underscores Novartis' strategic intent to expand its neuroscience and rare disease portfolio," highlighting the potential of Avidity's late-stage Antibody Oligonucleotide Conjugate (AOC) pipeline. Specifically, they cited del-zota, del-desiran, and del-brax as central to the platform's differentiated muscle and neuromuscular disease focus.

While recognizing the strength of Avidity's programs, H.C. Wainwright moved to a Neutral rating based on the assumption that no competing bidder would emerge. "Given the proposed acquisition we are moving our rating to Neutral," the analysts wrote, suggesting the upside was now capped by the fixed transaction value.

In setting the price target at US$72, H.C. Wainwright used a blended methodology combining a discounted cash flow (DCF) valuation of US$51 per share and a P/E-based valuation of US$92 per share, weighted equally. They applied a discount rate of 11% for the DCF and assumed a 25x multiple of taxed and diluted 2034 EPS in the P/E scenario.

The firm outlined several risks to their investment thesis and valuation, including potential failures in clinical trials, regulatory approvals, or commercial execution across Avidity's three lead programs. They estimated that 54% of the total valuation was attributed to the facioscapulohumeral muscular dystrophy (FSHD) program.

Also on October 27, ROTH Capital Partners downgraded Avidity Biosciences from Buy to Neutral following the announcement of its planned US$12 billion acquisition by Novartis. Analyst Boobalan Pachaiyappan raised the 12-month price target from US$62 to US$72 to reflect the proposed offer price but questioned whether the terms fully captured the long-term value of Avidity's pipeline.

According to the report, "we do not view the proposed offer as ‘generous' to RNA shareholders," citing the multi-billion-dollar sales potential of Del-desiran and Del-brax, with additional support from Del-zota. The analyst emphasized that the acquisition "underscores the strength of RNA's de-risked rare disease neuromuscular programs and lengthy patent shelf-life to fend off competition."

ROTH described Novartis as benefiting significantly from the transaction, stating that "Novartis is getting the most bang for its buck in this merger, not Avidity, in our view." The firm also highlighted the potential for other large pharmaceutical companies to submit competing bids, naming multiple possible suitors while noting the uncertainty of a go-shop provision.

The report maintained a cautious stance, stating that the $72 per share valuation, while representing a 46% premium to the prior close, did "not adequately capitulate the value of the rest of the DMD franchise and DM1/FSHD revenue contributions from ROW regions in the long run." Despite the downgrade, ROTH continued to view Avidity's neuromuscular portfolio as a high-value asset, supported by strong IP protection and a differentiated delivery platform.

Three-Drug Momentum: Strategic Restructuring and Regulatory Milestones Ahead

Avidity's strategic restructuring in preparation for the Novartis acquisition includes the creation of SpinCo, which will retain the company's early-stage precision cardiology programs and be led by current Chief Program Officer Kathleen Gallagher. Meanwhile, Avidity's neuromuscular franchise will transition to Novartis, enabling a global commercial push for its AOC-based RNA therapeutics.

The company reported that its EXPLORE44® and EXPLORE44-OLE™ studies of del-zota produced functional improvements and sustained biomarker responses, including an approximate 25% increase in dystrophin expression and an over 80% reduction in creatine kinase, a key marker of muscle damage. Avidity confirmed its plan to submit a Biologics License Application (BLA) for del-zota by the end of 2025, following alignment with the U.S. Food and Drug Administration.

For del-desiran, enrollment in the Phase 3 HARBOR™ trial has been completed, with topline data expected in the second half of 2026. Data from earlier trials indicated long-term safety and signs of disease reversal in patients with DM1. Avidity intends to initiate regulatory submissions in the U.S., Europe, and Japan in the second half of 2026.

In parallel, Avidity has initiated FORTITUDE-3™, a global Phase 3 trial for del-brax in FSHD. This follows FDA alignment on accelerated and full approval pathways. A biomarker cohort of 51 participants in the related FORTITUDE study has been fully enrolled, with a primary endpoint focused on cDUX, a circulating biomarker tied to disease severity. Topline results are expected in Q2 2026, with a BLA submission anticipated in the second half of 2026.

The merger and program progress suggest a pivotal transition phase for Avidity, with three separate regulatory filings planned across its lead candidates over a 12-month window. The company also noted that its pro forma cash position of approximately US$1.4 billion, as of Q2 2025, is expected to support operations through mid-2027.

Ownership and Share Structure¹

Insiders own approximately 0.75% of Avidity.

98.20% is held by institutions. Of them, Fidelity Management holds 13.35%, The Vanguard Group holds 8.76%, and James Henderson Investors owns 8.05%.

The rest is held by retail shareholders.

The company has 150.68 million shares outstanding and 134.05 million common shares. Its market cap is US$10.67 billion. Its 52-week range is US$21.51 to US$70.98.